GlobeStar Therapeutics Corp - Quarter Report: 2014 June (Form 10-Q)

UNITED STATES

SECURITY AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 333-170315

FIRST TITAN CORP.

(Exact name of registrant as specified in its charter)


Florida		27-3480481
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

495 Grand Boulevard, Suite 206 Miramar Beach, FL		32550
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (850) 269-7267

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check is smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 12, 2014, 21,760,026 shares of common stock are issued and outstanding.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION	4

Item 1. Financial Statements	4

Balance Sheets (Unaudited)	4

Statements of Operations (Unaudited)	5

Statements of Comprehensive Loss (Unaudited)	6

Statement of Stockholders’ Equity (Deficit) (Unaudited)	7

Statements of Cash Flows (Unaudited)	8

Notes to the Unaudited Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3. Quantitative and Qualitative Disclosures about Market Risk	22

Item 4. Controls and Procedures	22

PART II — OTHER INFORMATION	23

Item 1. Legal Proceedings	23

Item 1A. Risk Factors	23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3. Defaults upon Senior Securities	23

Item 4. Mine Safety Disclosures	23

Item 5. Other Information	23

Item 6. Exhibits	23

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to First Titan Corp., a Florida corporation.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRST TITAN CORP.

BALANCE SHEETS

(UNAUDITED)


	June 30, 2014			September 30, 2013
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	17,761		$	127,748
Accounts receivable and accrued revenue		21,781			10,458
Prepaid expenses		12,160			—
Total current assets		51,702			138,206

Investment in available-for-sale securities		56,279			—
Oil and gas properties, full cost method of accounting
Evaluated property, net of accumulated depletion of $122,678 and $60,671 and net of accumulated impairment of $80,141 and $80,141, respectively.		66,484			123,777
Unevaluated property		250,575			200,575
Total oil and gas properties		317,059			324,352

TOTAL ASSETS	$	425,040		$	462,558

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	189,063		$	113,558
Current portion of convertible notes payable, net of discount of $52,787 and $0, respectively.		56,509			—
Current portion of accrued interest payable		120			—
Current portion of asset retirement obligation		7,500			7,500
Total current liabilities		253,192			121,058

Convertible notes payable, net of discount of $607,087 and $925,840, respectively.		197,632			76,262
Accrued interest payable		39,526			5,812
Asset retirement obligation		15,040			14,144
TOTAL LIABILITIES		505,390			217,276

COMMITMENTS AND CONTINGENCIES		—			—

STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, $0.0001 par value; 250,000,000 shares authorized; 20,760,026 and 10,863,730 shares issued and outstanding at June 30, 2014 and September 30, 2013, respectively.		2,076			1,086
Additional paid-in capital		3,037,607			2,355,801
Accumulated deficit		(3,141,312	)		(2,111,605	)
Accumulated other comprehensive income		21,279			—
Total stockholders’ equity (deficit)		(80,350	)		245,282

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	425,040		$	462,558

The accompany notes are an integral part of these unaudited financial statements.

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FIRST TITAN CORP.

STATEMENTS OF OPERATIONS

(UNAUDITED)


	Nine months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013

OIL AND GAS SALES, net	$	82,133		$	40,622		$	28,064		$	2,915

OPERATING EXPENSES
Lease operating expense		13,489			819			2,165			186
Depletion, depreciation and amortization		62,007			7,206			31,377			—
Accretion expense		896			25			370			8
General and administrative expense		417,223			348,847			140,910			124,558

LOSS FROM OPERATIONS		(411,482	)		(316,275	)		(146,758	)		(121,837	)

OTHER INCOME (EXPENSE)
Interest expense		(618,225	)		(193,245	)		(355,866	)		(55,783	)

NET LOSS	$	(1,029,707	)	$	(509,520	)	$	(502,624	)	$	(177,620	)

NET LOSS PER COMMON SHARE – basic and fully diluted	$	(0.07	)	$	(0.07	)	$	(0.03	)	$	(0.02	)

COMMON SHARES OUTSTANDING basic and fully diluted		14,310,806			7,307,182			17,443,970			9,932,407

The accompany notes are an integral part of these unaudited financial statements.

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FIRST TITAN CORP.

STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)


	Nine months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013

NET LOSS	$	(1,029,707	)		(509,520	)		(502,624	)		(177,620	)

Change in fair value of available-for-sale securities		21,279			—			(1,941	)		—

Comprehensive loss	$	(1,008,428	)	$	(509,520	)	$	(504,205	)	$	(177,620	)

The accompany notes are an integral part of these unaudited financial statements.

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FIRST TITAN CORP.

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)


	Common Stock			Additional Paid In		Accumulated Other Comprehensive		Accumulated
	Shares	Amount		Capital		Income		Deficit			Total

BALANCE, September 30, 2013	10,863,730	$	1,086		2,355,801	$	—	$	(2,111,605	)	$	245,282

Net loss	—		—		—		—		(1,029,707	)		(1,029,707	)
Other comprehensive income	—		—		—		21,279		—			21,279
Comprehensive loss												(1,008,428	)
Shares issued for conversion of notes payable	9,896,296		990		394,862		—		—			395,852
Discount on issuance of convertible note payable	—		—		276,285		—		—			276,285
Imputed interest	—		—		10,659		—		—			10,659

BALANCE, June 30, 2014	20,760,026	$	2,076	$	3,037,607	$	21,279	$	(3,141,312	)	$	(80,350	)

The accompany notes are an integral part of these unaudited financial statements.

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FIRST TITAN CORP.

STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine months ended June 30,
	2014			2013

CASH FLOW FROM OPERATING ACTIVITIES:
Net loss	$	(1,029,707	)	$	(509,520	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depletion and accretion		62,903			7,231
Impairment of oil and gas properties		—			—
Amortization of discount on convertible note payable		542,251			149,412
Imputed interest expense		10,659			29,191
Changes in operating assets and liabilities:
Accounts receivable and accrued revenue		(11,323	)		(6,150	)
Prepaid expenses		(12,160	)		—
Accounts payable		75,505			26,500
Accrued interest payable		65,314			14,642
NET CASH USED IN OPERATING ACTIVITIES		(296,558	)		(288,694	)

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in oil and gas properties		(54,714	)		(86,199	)
Purchase of available for sale securities		(35,000	)		—
NET CASH USED IN INVESTING ACTIVITIES		(89,714	)		(86,199	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances		276,285			577,531
NET CASH PROVIDED BY FINANCING ACTIVITIES		276,285			577,531

NET INCREASE (DECREASE) IN CASH		(109,987	)		202,638

CASH, at the beginning of the period		127,748			1,359

CASH, at the end of the period	$	17,761		$	203,997

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	—		$	—
Taxes	$	—		$	—

Noncash investing and financing transaction:
Change in fair value of available-for-sale securities	$	21,279		$	—
Refinancing of advances into convertible notes payable	$	—		$	519,615
Beneficial conversion feature on convertible note payable	$	276,285		$	519,615
Common stock issue for conversion of note payable	$	395,852		$	144,693

The accompany notes are an integral part of these unaudited financial statements.

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FIRST TITAN CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Note 1. General Organization and Business

First Titan Corp. (the “Company”), a Florida corporation, was formed to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. The Company is currently primarily an oil and gas exploration company.

The Company was incorporated on September 16, 2010 with our corporate headquarters located in Bradenton, Florida. Our year-end is September 30.

On September 16, 2011, First Titan Corporation created First Titan Energy, LLC to invest in oil and gas properties, greenfield projects and in the development of cutting edge exploration and production technologies.

On September 16, 2011, we formed a new subsidiary company —First Titan Technical, LLC—to commence business operations designing and marketing automotive electronics custom-designed for heavy-duty vehicles.

Restatement

In July 2014, the Company determined that due to an error in accounting for the acquisition of available for sale securities, the Company’s consolidated financial statements as of and for the periods ended December 31, 2013 and March 31, 2014 should no longer be relied upon. The purpose of the restatement was to correct the accounting for our purchase of the common stock of BioFuels Power Corp. The Company had originally written off its investment in the common stock of BioFuels Power Corp. However, since the common stock is quoted on a public market, the investment in the common stock should have been accounted for as an investment in available for sale securities. As a result of the restatement, the common stock was recorded at its fair market value on each balance sheet date. Changes in the fair market value of the securities are recognized in other comprehensive income.

The Company restated the consolidated statements of operations and comprehensive loss for the three months ended December 31, 2013 and for the six months and three months ended March 31, 2014 as follows:


	Three months ended December 31, 2013
	As originally reported			Adjustments		As Restated

OIL AND GAS SALES, net	$	32,210				$	32,210

OPERATING EXPENSES
Lease operating expense		3,817					3,817
Depletion, depreciation and amortization		22,900					22,900
Accretion expense		348					348
Impairment of investments		25,000		(25,000	) (1)		—
General and administrative expense		165,068					165,068

LOSS FROM OPERATIONS		(184,923	)				(159,923	)

OTHER EXPENSE:
Interest expense		(195,598	)				(195,598	)

Net loss	$	(380,521	)			$	(355,521	)

Change in fair value of available for sale securities		—		4,640	(2)		4,640

Comprehensive loss	$	(380,521	)			$	(350,881	)

Net loss per common share – basic and diluted	$	(0.03	)			$	(0.03	)

Weighted average number of common shares outstanding- basic and diluted		11,741,447					11,741,447

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	Six months ended March 31, 2014
	As originally reported			Adjustments		As Restated

OIL AND GAS SALES, net	$	54,069				$	54,069

OPERATING EXPENSES
Lease operating expense		11,324					11,324
Depletion, depreciation and amortization		30,630					30,630
Accretion expense		526					526
Impairment of investments		35,000		(35,000	) (1)		—
General and administrative expense		276,313					276,313

LOSS FROM OPERATIONS		(299,724	)				(264,724	)

OTHER EXPENSE:
Interest expense		(262,359	)				(262,359	)

Net loss	$	(562,083	)			$	(527,083	)

Change in fair value of available for sale securities		—		23,220	(2)		23,220

Comprehensive loss	$	(562,083	)			$	(503,863	)

Net loss per common share – basic and diluted	$	(0.04	)			$	(0.04	)

Weighted average number of common shares outstanding- basic and diluted		12,744,225					12,744,225


	Three months ended March 31, 2014
	As originally reported			Adjustments		As Restated

OIL AND GAS SALES, net	$	21,859				$	21,859

OPERATING EXPENSES
Lease operating expense		7,507					7,507
Depletion, depreciation and amortization		7,730					7,730
Accretion expense		178					178
Impairment of investments		10,000		(10,000	) (1)		—
General and administrative expense		111,245					111,245

LOSS FROM OPERATIONS		(114,801	)				(104,801	)

OTHER EXPENSE:
Interest expense		(66,761	)				(66,761	)

Net loss	$	(181,562	)			$	(171,562	)

Change in fair value of available for sale securities		—		18,580	(2)		18,580

Comprehensive loss	$	(181,562	)			$	(152,982	)

Net loss per common share – basic and diluted	$	(0.01	)			$	(0.01	)

Weighted average number of common shares outstanding- basic and diluted		13,769,286					13,769,286

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Adjustments to consolidated financial statements:

(1) Reverse impairment of investment.

(2) Recognize change in fair value of available for sale securities.

Note 2. Going Concern

For the nine months ended June 30, 2014, the Company had a net loss of $1,029,707 and negative cash flow from operating activities of $296,558. As of June 30, 2014, the Company has negative working capital of $201,490. Although the Company began receiving revenue on October 1, 2012, management does not anticipate having positive cash flow from operations in the near future.

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company that will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve profitability and cash flows from operations to sustain its operations.

Note 3. Summary of Significant Accounting Policies

Interim Financial Statements

The accompanying these unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements for the fiscal year ended September 30, 2013 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”). Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statement for the most recent fiscal year ended September 30, 2013 have been omitted.

The results of operations for the nine month period ended June 30, 2014 are not necessarily indicative of the results to be expected for the full fiscal year ending September 30, 2014.

Consolidated Financial Statements

The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, First Titan Energy, LLC and First Titan Technical, LLC, from the date of their formation. Significant intercompany transactions have been eliminated in consolidation.

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Credit Risk due to Certain Concentrations

We extend credit, primarily in the form of uncollateralized oil and gas sales through the operators of our working interests, to various companies in the oil and gas industry, which results in a concentration of credit risk. The concentration of credit risk may be affected by changes in economic or other conditions within our industry and may accordingly impact our overall credit risk. However, we believe that the risk of these unsecured receivables is mitigated by the nature of the companies to which we extend credit. For the nine months ended June 30, 2014, two operators accounted for 61% and 39% of our oil and gas sales. Those operators account for 57% and 43% of accounts receivable as of June 30, 2014. We did not recognize any credit losses during the nine months ended June 30, 2014. We have not recognized an allowance for doubtful accounts as of June 30, 2014. All amounts receivable as of June 30, 2014 were collected subsequent to year end.

Cash and Cash Equivalents

All cash, other than held in escrow, is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Temporary cash investments with an original maturity of six months or less are considered to be cash equivalents.

Cash was $17,761 and $127,748 at June 30, 2014 and September 30, 2013, respectively. There were no cash equivalents as of June 30, 2014 and September 30, 2013.

Oil and Gas Properties

The Company follows the full cost method of accounting for its oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations.

Depletion of capitalized oil and gas properties and estimated future development costs, excluding unproved properties, are based on the units-of-production method based on proved reserves. The company recognized $62,007 and $7,206 of depletion during the nine months ended June 30, 2014 and 2013, respectively. Net capitalized costs of oil and gas properties, less related deferred taxes, are limited to the lower of unamortized cost or the cost ceiling, defined as the sum of the present value of estimated future net revenues from proved reserves based on unescalated prices discounted at 10 percent, plus the cost of properties not being amortized, if any, plus the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any, less related income taxes. As of June 30, 2014, the Company has oil and gas properties in the amount of $250,575 that are being excluded from amortization because they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the present value of estimated future net revenues as discussed above are charged to impairment expense. The Company applies the full cost ceiling test on a quarterly basis on the date of the latest balance sheet presented.

Based on management’s review, 100% of the unproved oil and gas properties balance as of June 30, 2014 are expected to be added to amortization during the year ending September 30, 2014. The table below sets forth the cost of unproved properties excluded from the amortization base as of June 30, 2014 and notes the year in which the associated costs were incurred:


	Year of Acquisition
	2012		2013		2014		Total
Acquisition costs	$	153,264	$	47,311	$	50,000	$	250,575
Development costs		—		—		—		—
Exploration costs		—		—		—		—
Total	$	153,264	$	47,311	$	50,000	$	250,575

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Asset retirement costs are recognized when the asset is placed in service, and are included in the amortization base and amortized over proved reserves using the units of production method. Asset retirement costs are estimated by management using existing regulatory requirements and anticipated future inflation rates.

Common Stock

The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.

Earnings (Loss) per Common Share

The Company computes basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. The basic earnings (loss) per common share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per common share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no dilutive shares outstanding for any periods reported.

Revenue Recognition

Sales of crude oil are recognized when the delivery to the purchaser has occurred and title has been transferred. This occurs when oil has been delivered to a pipeline or a tank lifting has occurred. Crude oil is priced on the delivery date based upon prevailing prices published by purchasers with certain adjustments related to oil quality and physical location.

Financial Instruments

The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


Level 1 -	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 -	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 -	Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.

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On September 16, 2010, the Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.

The following table presents assets that were measured and recognized at fair value as of June 30, 2014 and September 30, 2013 and the periods then ended on a recurring and nonrecurring basis:


June, 30 2014 Description	Level 1		Level 2		Level 3		Total Realized Loss
Asset retirement obligation	$	—	$	—	$	22,540	$	—
Available for sale securities		56,279		—		—		—
Totals	$	56,279	$	—	$	22,540	$	—


September, 30 2013 Description	Level 1		Level 2		Level 3		Total Realized Loss
Asset retirement obligation	$	—	$	—	$	21,644	$	—
Totals	$	—	$	—	$	21,644	$	—

Recently Issued Accounting Pronouncements

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under GAAP. The new amendments will require an organization to:


·	Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period; and

·	Cross-reference to other disclosures currently required under GAAP for other reclassification items (that are not required under GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendment was effective for the Company beginning October 1, 2013. The adoption of ASU No. 2013-02 did not have a material impact on our financial position or results of operations.

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In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The Company will adopt ASU No. 2013-01 effective October 1, 2014. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update were effective for the Company beginning October 1, 2013. The adoption of ASU 2012-04 did not have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 has not had a material impact on our financial position or results of operations.

Note 4. Investment in Available for Sale Securities

On October 11, 2013, we entered into an agreement with Biofuels Power Corp. (“Biofuels Power”) to acquire the common stock of Biofuels Power. Under the terms of the agreement, we will contribute introductions and consulting with respect to marketing and introductions for business. In addition, we will fund up to $100,000 in monthly contributions of $20,000. These contributions are solely at the discretion of the Company. In exchange for the contributions, we will receive common stock of Biofuels Power Corp. at two-thirds of the market price of the common stock.

During the nine months ended June 30, 2014, we contributed $35,000 to the joint venture through the purchase of Biofuel Power’s common stock. As a result, we acquired 194,067 shares of Biofuel Power common stock. The shares were valued at $56,279 on June 30, 2014 based on the closing market price of the stock on that date.

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Note 5. Related Party Transactions

On March 14, 2014, the Company entered into a participation and operating agreement (the “Participation Agreement”) with SoHo Resource Holdings I, LLC (“SoHo”) for the joint acquisition and development of oil and gas leases in Bell, Milam, Falls, Robertson, Limestone, Freestone, Leon, Madison and Brazos counties in Texas (the “Target Area”). Under the terms of the Participation Agreement, the Company will pay $300 per acre for its proportionate share of acreage in the Target Area (the “Target Acreage”). The Target Acreage, which will not have more than a 25% royalty burden, will be acquired by SoHo, who will manage all operations under the Participation Agreement. Under the terms of the Participation Agreement, the Company will be invoiced for its share of the Target Acreage cost and will have thirty days to pay its proportionate cost for the Target Acreage. The Company will pay 33.33% of the drilling and completion costs associated with the wells drilled and/or recompleted on the Target Acreage in order to receive its 25.00% working interest in the wells until payout and 18.75% working interest after well payout. Under the terms of the Participation Agreement, the Company must remit its proportionate share of drilling and completion costs within fifteen days of notice by SoHo.

G. Jonathan Pina, our CEO, owns 50% of the membership interest in SoHo; however, he does not have daily management oversight of SoHo. As of June 30, 2014, the Company had made $50,000 in payments to SoHo.

On June 15, 2014, SoHo notified us that they had secured additional acreage in the project area. In accordance with the Participation Agreement, we will need to contribute an additional $50,000 to SoHo.

Note 7. Advances from Third Parties

During the nine months ended June 30, 2014, the Company received net, non-interest bearing advances from certain third parties totaling $276,285. The total amount due under these advances as of June 30, 2014 was $0. These advances are not collateralized, non-interest bearing and are due on demand. During the nine months ended June 30, 2014, we recognized imputed interest expense in the amount of $10,659 on these advances.

Note 8. Convertible Notes Payable

Balances

Convertible notes payable consists of the following as of June 30, 2014 and September 30, 2013:


	June 30, 2014			September 30, 2013
Convertible note payable in the original principal amount of $329,050 due on February 28, 2015, bearing interest at 10% per year, convertible into common stock at a rate of $0.04 per share.	$	—		$	283,103
Convertible note payable in the original principal amount of $109,565 due on June 30, 2015, bearing interest at 10% per year, convertible into common stock at a rate of $0.04 per share.		109,296			190,565
Convertible note payable in the original principal amount of $528,434 due on September 30, 2015, bearing interest at 10% per year, convertible into common stock at a rate of $0.04 per share.		528,434			528,434
Convertible note payable in the original principal amount of $276,825 due on June 30, 2016, bearing interest at 10% per year, convertible into common stock at a rate of $0.03 per share.		276,285			—
Total convertible notes payable	$	914,015		$	1,002,102

Less: current portion of convertible notes payable		(109,296	)		—
Less: discount on noncurrent convertible notes payable		(607,087	)		(925,840	)
Long-term convertible notes payable, net of discount	$	$197,632		$	76,262

During nine months ended June 30, 2014, the holders of the Convertible Note Payable dated February 28, 2013 elected to convert principal and accrued interest in the amounts show below into share of common stock at a rate of $0.04 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement, which provided for conversion at $0.04 per share.

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Date	Amount Converted		Number of Shares Issued	Unamortized Discount
October 25, 2013	$	20,000	500,000	$	14,119
October 31, 2013		20,000	500,000		15,961
December 10, 2013		10,000	250,000		5,818
December 12, 2013		20,000	500,000		15,717
December 27, 2013		20,000	500,000		15,083
February 7, 2013		20,000	500,000		13,028
March 3, 2014		24,000	600,000		16,222
March 4, 2014		24,000	600,000		16,967
April 1, 2014		24,000	600,000		15,637
April 14, 2014		28,000	700,000		18,761
April 25, 2014		24,000	600,000		15,699
May 15, 2014		32,000	800,000		20,181
May 21, 2014		29,852	746,296		17,578
Total	$	295,852	7,396,296	$	200,771

As of June 30, 2014, there was no remaining balance of the note dated February 28, 2013.

During nine months ended June 30, 2014, the holders of the Convertible Note Payable dated June 30, 2013 elected to convert principal and accrued interest in the amounts show below into share of common stock at a rate of $0.04 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement, which provided for conversion at $0.04 per share.


Date	Amount Converted		Number of Shares Issued	Unamortized Discount
June 16, 2014	$	32,000	800,000	$	7,699
June 17, 2014		32,000	800,000		16,525
June 26, 2014		36,000	900,000		18,816
Total	$	100,000	2,500,000	$	43,040

As of June 30, 2014, the remaining balance on the note dated February 28, 2013 was $109,926.

Issuance of Convertible Promissory Notes

On June 30, 2014, we issued a Convertible Promissory Note for $276,285 to refinance advances. The note is payable, with accrued interest, on June 30, 2016. The note bears interest at rate of 10% per year, and is convertible into common stock at a rate of $0.03 per share.

The Company evaluated the terms of this note in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the notes. Therefore, the Company recognized a beneficial conversion feature in the amount of $276,285 on June 30, 2014. The beneficial conversion feature was recognized as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. The discount to the Convertible Notes Payable is being amortized to interest expense over the life of the notes using the effective interest method.

The Company evaluated the application of ASC 470-50-40/55, Debtor’s Accounting for a Modification or Exchange of Debt Instrument as it applies to the three notes listed above and concluded that the revised terms constituted a debt modification rather than a debt extinguishment because the present value of the cash flow under the terms of each of the new instruments was less than 10% from the present value of the remaining cash flows under the terms of the original notes. No gain or loss on the modifications was required to be recognized.

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Note 9. Stockholders’ Equity

Conversion of Shares

During nine months ended June 30, 2014, the holders of our convertible notes elected to convert principal and interest into shares of common stock as detailed below:


Date	Amount Converted		Number of Shares Issued
October 25, 2013	$	20,000	500,000
October 31, 2013		20,000	500,000
December 10, 2013		10,000	250,000
December 12, 2013		20,000	500,000
December 27, 2013		20,000	500,000
February 7, 2013		20,000	500,000
March 3, 2014		24,000	600,000
March 4, 2014		24,000	600,000
April 1, 2014		24,000	600,000
April 14, 2014		28,000	700,000
April 25, 2014		24,000	600,000
May 15, 2014		32,000	800,000
May 21, 2014		29,852	746,296
June 16, 2014		32,000	800,000
June 17, 2014		32,000	800,000
June 26, 2014		36,000	900,000
Total	$	395,852	9,896,296

Imputed Interest

During nine months ended June 30, 2014, the Company recognized imputed interest of $10,659 as an increase to shareholders’ equity.

Note 10. Subsequent Events

On July 15, 2014 the Company paid SoHo Resource the remaining $50,000 in accordance with the Participation Agreement.

On July 28, 2014, the holders of the Convertible Promissory Note dated June 30, 2013 elected to convert $40,000 of principal and accrued interest into 1,000,000 shares of our common stock at a rate of $0.04 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

First Titan Corp was incorporated in Florida on September 16, 2010. The Company intended to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. The Company was considered to be in the development stage in accordance with ASC 915 until October 1, 2012 when it began receiving revenue.

We intend to invest in oil and gas properties, greenfield projects and in the development of cutting edge exploration and production technologies.

In September 2011, First Titan Corporation created First Titan Energy, LLC with the goal of capitalizing on the booming oil and gas industry. It is our intention to maximize shareholder value through mergers and acquisitions, greenfield projects and investments in the development of cutting edge exploration and production technologies.

First Titan Energy’s oil and gas development activities include the following:

Alabama – On May 2, 2012, we acquired a one percent working interest in one well in Little Cedar Creek Field in Alabama. This well was drilled during the fiscal year ended September 30, 2012 and we began receiving revenue during the fiscal year ended September 30, 2013. This well is located in the Little Cedar Field, Alabama’s largest producing oil field.

Louisiana – On January 3, 2012, we entered into a participation agreement in an oil and gas drilling project in Calcasieu Parish, Louisiana (the “Participation Agreement”). The South Lake Charles Prospect is located seven miles south of the city of Lake Charles, Louisiana. It is a middle Oligocene age geo-pressured prospect located in the middle and lower hackberry sands. Under the terms of the Participation Agreement, we will participate in the drilling of one well and may participate in the drilling of future wells if it chooses. We will pay 25% of the drilling cost of the first well and will receive 13.59% of the net revenue from the well. We anticipate that our share of the total drilling and completion cost of the initial well, projected to be drilled to approximately 15,500 feet, will be $3.4 million. On August 12, 2013, the Participation Agreement was amended to reduce our working interest to 1.8%. As a result, our share of the drilling cost is expected to be approximately $181,000. The Company has paid $143,264 of its share of the costs of the well to date. We will receive 1.4% of the revenue from this well. The well is currently being drilled and is expected to be completed in the first half of fiscal 2014.

During October 2012, we acquired a working interest in the Lake Boeuf Field in Southeast Louisiana. The field covers 300 acres in Lafourche Parish. The prospect was a 12,025 directional well to be drilled utilizing a land rig. The project has been indefinitely suspended. All amounts invested in this project have been transferred to the South Lake Charles Prospect.

Texas –On July 7, 2013, the Company acquired a 30% working interest in the Minns Project located in Waller County, Texas. The project included three producing wells and a salt water disposal well within the Brookshire Field. The project is targeted for additional development vis-à-vis reworks, deepening of wells, and potentially drilling new wells on the property.

Big Canyon Prospect – On January 19, 2012, we entered into an agreement to drill two wells on 640 acres of land located in Terrell County, Texas. Our option to drill expired January 27, 2013 and no wells have been drilled.

We have incurred losses since inception, have been issued a going concern opinion from our auditors, and rely upon the sale of our securities and debt financing to fund operations. We will need additional financing in order to continue operations.

Results of Operations

Nine months ended June 30, 2014 compared to the nine months ended June 30, 2013

Oil and Gas Sales

We earned net revenue of $82,133 during the period, compared to $40,622 during the comparable period in last year. The increase in revenue is due to the acquisition of the Minns Project late in fiscal 2013 and increased production from our Alabama project.

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Lease operating expense

We incurred lease operating expense of $13,489 and $819 during the nine months ended June 30, 2014 and 2013, respectively. The increase in lease operating expense is due to the acquisition of the Minns Project late in fiscal year 2013. Lease operating expense for the Minns Project was $12,837 for the nine months ended June 30, 2014.

Depletion, depreciation & amortization

We incurred depletion expense of $62,007 during the period, and $7,206 for the corresponding period last year. The increase in depletion is a result of higher production combined with a higher rate of depletion per BOE during the nine months end June 30, 2014.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $417,223 and $348,847 for the nine months ended June 30, 2014 and 2013, respectively. The increase is due to the higher professional fees during the current year.

Loss from Operations

Our loss from operation for the nine months ended June 30, 2014 and 2013 increased from $316,275 to $411,482, primarily due to the increases in depletion and professional fees discussed above.

Interest Expense

Interest expense increased from $193,245 for the nine months ended June 30, 2013 to $618,225 for the nine months ended June 30, 2014. Interest expense for the nine months ended June 30, 2014 included amortization of discount on convertible notes payable in the amount of $542,251, compared to $149,412 for the comparable period of 2013. The remaining increase is the result of the Company entering into interest-bearing convertible notes payable.

Net Loss

We incurred a net loss of $1,029,707 for the nine months ended June 30, 2014 as compared to $509,520 for the comparable period of 2013. The increase in the net loss was primarily the result of the increases in depletion, impairment, professional fees and interest expense discussed above.

Three months ended June 30, 2014 compared to the three months ended June 30, 2013

Oil and Gas Sales

We earned net revenue of $28,064 during the period, compared to $2,915 during the comparable period in last year. The increase of revenue is due to the acquisition of the Minns Project in late fiscal 2013 and increased production from our Alabama Project.

Lease operating expense

We incurred lease operating expense of $2,165 and $186 during the three months ended June 30, 2014 and 2013, respectively. The increase is due to the acquisition of the Minns Project late in fiscal 2013.

Depletion, depreciation & amortization

We incurred depletion expense of $31,377 during the period, and $0 for the equivalent period last year. The increase in depletion, depreciation and amortization is the result of higher production combined with a higher rate of depletion per BOE.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $140,910 and $124,558 for the three months ended June 30, 2014 and ended 2013, respectively. The year over year change is not meaningful.

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Loss from Operations

Our loss from operation for the nine months ended June 30, 2014 and 2013 increased from $121,837 to $146,758, due to the increase in oil sales, offset by the increase in depletion expense.

Interest Expense

Interest expense increased from $55,783 for the three months ended June 30, 2013 to $355,866 for the three months ended June 30, 2014. Interest expense for the three months ended June 30, 2014 included amortization of discount on convertible notes payable in the amount $225,340, compared to $40,046 for the comparable period of 2013. The remaining increase is the result of the higher principal balances on convertible notes payable and imputed interest on advances the Company received.

Net Loss

We incurred a net loss of $502,624 for the three months ended June 30, 2014 as compared to $177,620 for the comparable period of 2013. The increase in the net loss was primarily the result of the increased operating loss and interest expense discussed above.

Going Concern

Liquidity and Capital Resources

We anticipate needing approximately of $750,000 to fund our operations and to execute our business plan effectively over the next eighteen months. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status, we believe that we may be able to issue notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.

During the three months ended June 30, 2014, we incurred a net loss of $502,624. We raised the cash amount to be used in these activities from advances. As of June 30, 2014, we had cash on hand of $17,761 and negative working capital of $201,490. Our cash on hand will be adequate to fund our operations for less than one month.

As of the date of this filing, the current funds available to the Company will not be sufficient to continue maintaining a reporting status. Management believes if the Company cannot maintain its reporting status with the SEC, it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lost in its entirety.

To date, the Company has been able to fund operations through the sale of stock and by obtaining cash advances. The Company will have to seek additional financing in the future. However, the Company may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds to fund our operations, the Company may be forced to seek a buyer for our business or another entity with which we could create a joint venture. If all of these alternatives fail, we expect that the Company will be required to seek protection from creditors under applicable bankruptcy laws.

Our independent auditor has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital, and generate revenues. See Note 2 of our financial statements.

Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors’ independence, audit committee oversight, and the adoption of a code of ethics. Our Board of Directors is comprised of one individual who is also our executive officer. Our executive officer makes decisions on all significant corporate matters such as the approval of terms of the compensation of our executive officer and the oversight of the accounting functions.

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The Company has not yet adopted any of these corporate governance measures, and since our securities are not yet listed on a national securities exchange, the Company is not required to do so. The Company has not adopted corporate governance measures such as an audit or other independent committees of our board of directors as we presently do not have any independent directors. If we expand our board membership in future periods to include additional independent directors, the Company may seek to establish an audit and other committees of our board of directors. It is possible that if our Board of Directors included independent directors and if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Internal Control over Financial Reporting

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2014. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2014, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.


	1.	As of June 30, 2014, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

	2.	As of June 30, 2014, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Change in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings.

ITEM 1A. RISK FACTORS

Not applicable to a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no sales of unregistered equity securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

There were no defaults upon senior securities.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


3.1	Article of Incorporation (incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on November 3, 2010)
3.2	Bylaws (incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on November 3, 2010)
10.1	Working Interest Purchase and Sale Agreement (incorporated by reference to Form 10-Q for the quarter ended December 31, 2011, filed on February 14, 2012).
21	Subsidiaries of the Registrant
31.1 (1)	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer.
32.1 (1)	Section 1350 Certification of principal executive officer and principal financial accounting officer.
101 (2),(3)	XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q.


(1)	Filed or furnished herewith
(2)	In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”
(3)	To be submitted by amendment

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	First Titan Corp.


Date: August 19, 2014	BY: /s/ G. Jonathan Piña
	G. Jonathan Piña
	Chief Executive Officer, President, Secretary, Treasurer, Principal Executive Officer, Principal Finance and Accounting Officer and Sole Director

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